OMAHA, Neb. (Reuters) – Billionaire Warren Buffett on Saturday said it is unlikely that the United States and China will come to loggerheads on trade, and the countries would avoid doing “something extremely foolish.”

Warren Buffett, CEO of Berkshire Hathaway Inc, talks to a reporter in the exhibit hall at the company’s annual meeting in Omaha, Nebraska, U.S., May 5, 2018. REUTERS/Rick Wilking

“The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time,” Buffett said at Berkshire Hathaway Inc’s annual shareholder meeting, and that any tensions should not jeopardize the win-win benefits from trade.

“It is just too big and too obvious … that the benefits are huge and the world is dependent on it in a major way for its progress, that two intelligent countries (would) do something extremely foolish,” he said. “We both may do things that are mildly foolish from time to time. There is some give and take.”

The Trump administration has drawn a hard line in trade talks with China, demanding a $200-billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said on Friday.

Buffett, 87, and his longtime partner and fellow billionaire Charlie Munger, 94, also took pointed questions on Wells Fargo Co, politics, guns, healthcare and their investment choices from shareholders, journalists and analysts at the Berkshire meeting in Omaha, Nebraska.

Buffett defended Wells Fargo and its chief executive, Tim Sloan, in response to a question asking when Berkshire would ditch the bank, one of its largest common stock holdings. Many shareholders applauded the question.

He said the bank committed the “cardinal sin” of incentivizing employees into “kind of crazy conduct,” for which U.S. regulators imposed $1 billion of fines last month over lending abuses.

“Wells Fargo is a company that proved the efficacy of incentives, and it’s just that they just had the wrong incentives,” said Buffett.

Related Coverage

But he maintained that the bank is not “inferior” as an investment or morally to its main banking rivals.

Berkshire owned $25.2 billion of Wells Fargo stock as of March 31, down 14 percent from year end as a series of scandals weighed on the bank’s reputation.

Wells Fargo investors last week gave strong backing to the bank’s directors and executives on Tuesday, indicating confidence in its overhauled leadership to rebound.

Buffett addressed his alliance with another banker, JPMorgan Chase Co’s Jamie Dimon, and Amazon.com Inc’s Jeff Bezos to tackle healthcare. Buffett said U.S. healthcare costs are a tapeworm on the economy, and he said they expect to name a chief executive for that venture within a couple months.

The questions also elicited views on politics from the “Oracle of Omaha” and Munger.

Buffett, for instance, suggested U.S. President Donald Trump should be an “educator-in-chief” on the invisible benefits of trade.

Warren Buffett, CEO of Berkshire Hathaway Inc is seen on a screen at the company’s annual meeting in Omaha, Nebraska, U.S., May 5, 2018. REUTERS/Rick Wilking

Munger, meanwhile, answered a question on steel tariffs imposed by the White House by acknowledging that U.S. producers are hurting.

“Even Donald Trump can be right on some of this stuff,” he said.

Asked a pointed question why Buffett is willing to do business with gun makers, Buffett sharply retorted, “I do not believe in imposing my political opinions on the activities of our businesses.”

CASH STOCKPILE

Buffett faces a challenge investing Berkshire’s more than $108 billion of cash and equivalents, including for acquisitions, saying his “phone is not ringing off the hook with good deals.”

Shortly before the meeting, Berkshire ended its more than year-long stretch of falling operating profit, while a new accounting rule caused the conglomerate chaired by Warren Buffett to suffer an overall net loss. Buffett said the net results are not representative of the business.

The accounting change required Berkshire to report unrealized losses in its equity portfolio, which totaled $170.5 billion at year end, regardless of whether it planned to sell those stocks.

Berkshire’s net loss was $1.14 billion, compared with profit of $4.06 billion a year earlier.

But operating profit, which excludes investment and derivative gains and losses, rose 49 percent to a record $5.29 billion, or about $3,215 per Class A share, higher than the $3,116 per share analysts had expected, according to Thomson Reuters I/B/E/S.

Shareholders have been enthusiastic about Berkshire, which sent out slightly more tickets to this year’s extravaganza than in 2015, when an estimated 42,000 celebrated Buffett’s 50th year at the helm. Far more people are likely watching online via Yahoo Finance.

Outside the convention center, Berkshire shareholders lined up for prime seats in the middle of the night.

William Robertson, a Scotland native who now fights fires and does forestry work in Switzerland, said he lined up at 11:30 p.m. Friday, 7-1/2 hours before doors opened. This year’s meeting is his third.

“It gets me first place in the queue, I think when people go to so much effort it shows Warren how important he is for us,” Robertson said.

Once inside, shareholders in an exhibit hall snapped selfies with Buffett caricatures, ate ice cream and crawled through an aircraft on exhibit.

As Buffett gazed over a BNSF model railroad, a wall of media and shareholders, some holding Buffett figurines, crowded around him as he inched along.

“This is me moving at top speed,” he said, to laughter.

“Thank you for everything, Warren,” yelled one well-wisher.

Reporting by Trevor Hunnicutt and Jonathan Stempel in Omaha; Editing by Jennifer Ablan and Nick Zieminski